JetBlue Airways Corporation (NASDAQ: JBLU) today reported its
results for the fourth quarter 2019:
- Reported diluted earnings per share of $0.56 in the fourth
quarter of 2019 compared to a diluted earnings per share of $0.55
in the fourth quarter of 2018. Adjusted diluted earnings per share
was $0.56(1) in the fourth quarter of 2019 versus $0.50(1) in the
fourth quarter of 2018. Note A to this earnings release includes
the GAAP to Non-GAAP reconciliation between reported and adjusted
diluted earnings per share.
- GAAP pre-tax income of $220 million in the fourth quarter of
2019, compared to a pre-tax income of $201 million in the fourth
quarter of 2018. Excluding the one-time items, adjusted pre-tax
income of $221 million(1), up 8% from a pre-tax income of $205
million(1) in the fourth quarter of 2018.
- Pre-tax margin of 10.8%, up 0.6 percentage points from a
pre-tax margin of 10.2% in the fourth quarter of 2018. Adjusted
pre-tax margin of 10.9%(1), a 0.5 percentage point increase year
over year from a pre-tax margin of 10.4%(1), exclusive of the
one-time costs.
Highlights from the Fourth Quarter
2019
- Fourth quarter 2019 revenue per available seat mile (RASM)
declined (2.7)% year over year. This decline is largely in-line
with our updated guidance range of (3.5)% to (1.5)%.
- Operating expenses per available seat mile, excluding fuel
(CASM ex-fuel)(1) was flat year over year, at the midpoint of our
guidance range of (1.0)% to 1.0%. This was mainly driven by the
compounding benefits of the Structural Cost Program.
Key Guidance for the First Quarter and
Full Year 2020:
- Earnings per share is expected to range between $0.10 and $0.20
in the first quarter 2020. For the full year, JetBlue expects
earnings per share to range between $2.50 and $3.00.
- Capacity is expected to increase between 1.5% and 3.5% year
over year in the first quarter 2020. For the full year 2020,
JetBlue expects capacity to increase between 5.5% and 7.5%.
- RASM growth is expected to range between 0.0% and 3.0% for the
first quarter 2020 compared to the same period in 2019.
- CASM ex-fuel is expected to increase between 1.5% and 3.5% for
the first quarter of 2020. For the full year 2020, JetBlue expects
year over year CASM ex-fuel growth to range between (2.0)% and
0.0%.
For further details see the latest Investor Update and the
Fourth Quarter 2019 Earnings Presentation available via the
internet at http://investor.jetblue.com.
JetBlue will conduct a conference call to discuss its quarterly
earnings today, January 23, 2020 at 10:00 a.m. Eastern Time. A live
broadcast of the conference call will also be available via the
internet at http://investor.jetblue.com.
Executing our Plan to Reach our EPS
Commitments
“I could not be prouder of the accomplishments of the JetBlue
family over two decades. Over 20 years, we have become a “force for
good” in our industry. We have worked hard to improve our balance
sheet, expand and strengthen our network, and have made investments
in our fleet to improve margins and returns. More recently, we
focused our efforts to reset our cost structure – and return to our
roots as a low-cost airline,” said Robin Hayes, JetBlue’s Chief
Executive Officer.
“2019 saw an unusually volatile year in our Latin and Caribbean
markets, which masked some of the progress we have made in our
‘building blocks’. We are confident in our plan to strengthen our
RASM, and expect over two thirds of our revenue initiatives will
mature throughout this year. Our progress is showing a significant
sequential improvement in our expected RASM growth for the first
quarter of 2020.
We are pleased that our business is responding to the actions
we've been taking in our network, and this year we expect to
continue reaping the benefits of our commercial actions. This gives
us confidence in our ability to deliver our 2020 EPS goals.”
Revenue Performance and Outlook
“Our fourth quarter and full year 2019 capacity grew in the
upper half of our guidance range due to improved completion factor,
in addition to shifting the timing of our cabin restyling program
to make up for NEO delivery delays,” said Joanna Geraghty,
JetBlue’s President and Chief Operating Officer. “Our first quarter
2020 growth is unusually low, and our annual growth is over 2
points lower than our plan from our 2018 Investor Day, reflecting
our current expectations of Airbus deliveries.
Our fourth quarter RASM decreased 2.7 percent year over year, in
line with our December update range of (3.5) to (1.5) percent,
driven by softer than expected close-in bookings for the
Thanksgiving peak.
For the first quarter, we expect strong sequential improvement
in RASM in both our domestic and Latin markets, resulting from our
capacity actions, our revenue initiatives, easier comps and lower
scheduled growth. Our first quarter guidance of 0 to 3 percent
includes a headwind of approximately one half point to our system
RASM, due to earthquakes in Puerto Rico.”
Cost Performance, Outlook and Balance
Sheet
“CASM ex-fuel for the fourth quarter was flat, in line with the
mid-point of our guidance range, and for the full year CASM ex-fuel
grew 0.8%, beating the mid-point of our initial full year guidance
of 0 to 2 percent,” said Steve Priest, JetBlue’s EVP Chief
Financial Officer.
“For the first quarter of 2020, we expect CASM ex-fuel growth to
range between 1.5 and 3.5 percent. The year over year progression
in unit costs this quarter is mainly driven by unusually low
scheduled capacity growth, given the timing of 2019 deliveries. In
addition, we have scheduled maintenance events during the trough
period that result in expenses shifting into the quarter.
Our updated 2020 CASM ex-Fuel guidance is now between minus (2)
and 0 percent. We are pleased that despite the capacity constraints
tied to the NEO delays, our 2020 goal is very much in line with the
original CASM-ex Fuel goal we announced at our last Investor Day.
Furthermore, our 2020 plan reflects our commitment to deliver on
our 3-year CAGR goal of 0 to 1 percent.”
Capital Allocation and
Liquidity
JetBlue ended the quarter with approximately $1.3 billion in
unrestricted cash, cash equivalents, and short term investments, or
16.4% of trailing twelve month revenue. JetBlue repaid $65 million
in regularly scheduled debt and capital lease obligations during
the fourth quarter of 2019.
Fuel Expense and Hedging
The realized fuel price in the quarter was $2.07 per gallon, a
7.6% decline versus fourth quarter 2018 realized fuel price of
$2.24.
JetBlue has entered into forward fuel derivative contracts to
hedge its fuel consumption for the first and second quarters of
2020. Based on the forward curve as of January 10th, JetBlue
expects an average all-in price per gallon of fuel of $2.09 in the
first quarter of 2020.
About JetBlue
JetBlue is New York's Hometown Airline®, and a leading carrier
in Boston, Fort Lauderdale-Hollywood, Los Angeles (Long Beach),
Orlando, and San Juan. JetBlue carries more than 42 million
customers a year to nearly 100 cities in the U.S., Caribbean, and
Latin America with an average of more than 1,000 daily flights. For
more information, please visit jetblue.com.
Notes
(1) Note A provides a reconciliation of non-GAAP financial
measures used in this release and provides the reasons management
uses those measures.
Forward Looking Statements
Statements in this earnings release contain various
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, or the Securities Act, and
Section 21E of the Securities Exchange Act of 1934, as amended, or
the Exchange Act, which represent our management’s beliefs and
assumptions concerning future events. When used in this document
and in documents incorporated herein by reference, the words
“expects,” “plans,” “anticipates,” “indicates,” “believes,”
“forecast,” “guidance,” “outlook,” “may,” “will,” “should,”
“seeks,” “targets” and similar expressions are intended to identify
forward-looking statements. Forward-looking statements involve
risks, uncertainties and assumptions, and are based on information
currently available to us. Actual results may differ materially
from those expressed in the forward-looking statements due to many
factors, including, without limitation, our extremely competitive
industry; volatility in financial and credit markets which could
affect our ability to obtain debt and/or lease financing or to
raise funds through debt or equity issuances; our significant fixed
obligations and substantial indebtedness; volatility in fuel
prices, maintenance costs and interest rates; our reliance on high
daily aircraft utilization; our ability to implement our growth
strategy; our ability to attract and retain qualified personnel and
maintain our culture as we grow; our reliance on a limited number
of suppliers, including for aircraft, aircraft engines and parts
and vulnerability to delays by those suppliers; our dependence on
the New York and Boston metropolitan markets and the effect of
increased congestion in these markets; our reliance on automated
systems and technology; our being subject to potential
unionization, work stoppages, slowdowns or increased labor costs;
our presence in some international emerging markets that may
experience political or economic instability or may subject us to
legal risk; reputational and business risk from information
security breaches or cyber-attacks; changes in or additional
domestic or foreign government regulation, including new or
increased tariffs; changes in our industry due to other airlines'
financial condition; acts of war or terrorism; global economic
conditions or an economic downturn leading to a continuing or
accelerated decrease in demand for air travel; the spread of
infectious diseases; adverse weather conditions or natural
disasters; and external geopolitical events and conditions. It is
routine for our internal projections and expectations to change as
the year or each quarter in the year progresses, and therefore it
should be clearly understood that the internal projections, beliefs
and assumptions upon which we base our expectations may change
prior to the end of each quarter or year.
Given the risks and uncertainties surrounding forward-looking
statements, you should not place undue reliance on these
statements. Further information concerning these and other factors
is contained in the Company's Securities and Exchange Commission
filings, including but not limited to, the Company's 2018 Annual
Report on Form 10-K and its Quarterly Reports on Form 10-Q. In
light of these risks and uncertainties, the forward-looking events
discussed in this release might not occur. Our forward-looking
statements speak only as of the date of this release. Other than as
required by law, we undertake no obligation to update or revise
forward-looking statements, whether as a result of new information,
future events, or otherwise.
This release also includes certain “non-GAAP financial measures”
as defined under the Exchange Act and in accordance with Regulation
G. We have included reconciliations of these non-GAAP financial
measures to the most directly comparable financial measures
calculated and provided in accordance with U.S. GAAP within this
release.
JETBLUE AIRWAYS CORPORATION CONSOLIDATED
STATEMENTS OF OPERATIONS (in millions, except per share
amounts) (unaudited) Three Months Ended
Twelve Months Ended December 31, Percent
December 31, Percent
2019
2018(1)
Change
2019
2018(1)
Change
OPERATING REVENUES Passenger
$ 1,948
$ 1,891
3.0
$ 7,786
$ 7,381
5.5
Other
83
77
6.3
308
277
11.0
Total operating revenues
2,031
1,968
3.2
8,094
7,658
5.7
OPERATING EXPENSES Aircraft fuel and related taxes
455
476
(4.6)
1,847
1,899
(2.7)
Salaries, wages and benefits
589
543
8.4
2,320
2,044
13.5
Landing fees and other rents
112
108
4.8
474
462
2.6
Depreciation and amortization
140
123
13.7
525
469
12.1
Aircraft rent
23
28
(18.5)
99
104
(5.1)
Sales and marketing
75
79
(5.1)
290
294
(1.1)
Maintenance, materials and repairs
137
128
7.4
619
625
(1.0)
Other operating expenses
272
263
3.5
1,106
1,060
4.2
Special items
1
4
(82.9)
14
435
(96.7)
Total operating expenses
1,804
1,752
3.0
7,294
7,392
(1.3)
OPERATING INCOME
227
216
4.9
800
266
200.1
Operating margin
11.2%
11.0%
0.2
pts.
9.9%
3.5%
6.4
pts.
OTHER INCOME (EXPENSE) Interest expense
(22)
(20)
10.3
(79)
(70)
13.5
Capitalized interest
4
3
42.3
14
10
40.9
Gain on equity method investments
-
-
n/a
15
-
n/a
Interest income and other
11
2
519.8
18
13
42.3
Total other income (expense)
(7)
(15)
55.7
(32)
(47)
32.6
INCOME BEFORE INCOME TAXES
220
201
9.6
768
219
250.2
Pre-tax margin
10.8%
10.2%
0.6
pts.
9.5%
2.9%
6.6
pts. Income tax expense
59
31
89.1
199
30
552.2
NET INCOME
$ 161
$ 170
(4.9)
$ 569
$ 189
201.4
EARNINGS PER COMMON SHARE: Basic
$ 0.56
$ 0.55
$ 1.92
$ 0.60
Diluted
$ 0.56
$ 0.55
$ 1.91
$ 0.60
WEIGHTED AVERAGE SHARES OUTSTANDING: Basic
285.8
306.1
296.6
312.9
Diluted
287.9
307.8
298.4
314.5
(1) Prior period results have been recast to reflect the
adoption of ASC 842 Leases.
JETBLUE AIRWAYS CORPORATION COMPARATIVE OPERATING
STATISTICS (unaudited) Three Months
Ended Twelve Months Ended December 31,
Percent December 31, Percent
2019
2018
Change
2019
2018
Change
Revenue passengers (thousands)
10,476
10,296
1.7
42,728
42,150
1.4
Revenue passenger miles (millions)
13,171
12,519
5.2
53,617
50,790
5.6
Available seat miles (ASMs) (millions)
16,079
15,168
6.0
63,841
59,881
6.6
Load factor
81.9%
82.5%
(0.6)
pts.
84.0%
84.8%
(0.8)
pts. Aircraft utilization (hours per day)
11.6
11.5
0.9
11.9
11.8
0.8
Average fare
$ 185.96
$ 183.62
1.3
$ 182.23
$ 175.11
4.1
Yield per passenger mile (cents)
14.79
15.10
(2.1)
14.52
14.53
(0.1)
Passenger revenue per ASM (cents)
12.12
12.46
(2.8)
12.20
12.33
(1.1)
Revenue per ASM (cents)
12.63
12.98
(2.7)
12.68
12.79
(0.9)
Operating expense per ASM (cents)(2)
11.22
11.55
(2.9)
11.43
12.34
(7.4)
Operating expense per ASM, excluding fuel (cents)(1)(2)
8.31
8.31
-
8.44
8.37
0.8
Departures
91,888
91,766
0.1
368,355
366,619
0.5
Average stage length (miles)
1,142
1,105
3.3
1,140
1,096
4.0
Average number of operating aircraft during period
255.2
250.2
2.0
253.6
246.8
2.8
Average fuel cost per gallon, including fuel taxes
$ 2.07
$ 2.24
(7.6)
$ 2.09
$ 2.24
(6.7)
Fuel gallons consumed (millions)
219
212
3.2
885
849
4.3
Average number of full-time equivalent crewmembers
18,535
17,766
(1) Refer to Note A at the end of our Earnings Release for more
information on this non-GAAP financial measure. Operating expense
per available seat mile, excluding fuel (“CASM Ex-Fuel”) excludes
fuel and related taxes, other non-airline operating expenses, and
special items. (2) Recast to reflect the adoption of ASC 842
Leases.
JETBLUE AIRWAYS CORPORATION SELECTED
CONSOLIDATED BALANCE SHEET DATA (in millions)
December 31, December 31,
2019
2018
(unaudited) Cash and cash equivalents
$
929
$
474
Total investment securities
402
416
Total assets(1)
11,918
10,959
Total debt
2,334
1,670
Stockholders' equity(1)
4,799
4,685
(1) Prior period results have been recast to reflect the
adoption of ASC 842 Leases.
Note A – Non-GAAP Financial Measures
JetBlue sometimes uses non-GAAP financial measures in this press
release. Non-GAAP financial measures are financial measures that
are derived from the consolidated financial statements, but that
are not presented in accordance with generally accepted accounting
principles in the United States, or GAAP. We believe these non-GAAP
financial measures provide a meaningful comparison of our results
to others in the airline industry and our prior year results.
Investors should consider these non-GAAP financial measures in
addition to, and not as a substitute for, our financial performance
measures prepared in accordance with GAAP. Further, our non-GAAP
information may be different from the non-GAAP information provided
by other companies. The information below provides an explanation
of each non-GAAP financial measure and shows a reconciliation of
non-GAAP financial measures used in this press release to the most
directly comparable GAAP financial measures.
Operating expense per available seat mile, excluding fuel and
related taxes, other non-airline operating expenses, and special
items (“CASM Ex-Fuel”)
Operating expenses per available seat mile, or CASM, is a common
metric used in the airline industry. We exclude aircraft fuel and
related taxes, operating expenses related to other non-airline
businesses, such as JetBlue Technology Ventures and JetBlue Travel
Products, and special items from operating expenses to determine
CASM ex-fuel, which is a non-GAAP financial measure. During the
periods presented below, special items include one-time costs
related to the Embraer E190 fleet transition as well as one-time
costs related to the implementation of our pilots' collective
bargaining agreement. We believe that CASM ex-fuel is useful for
investors because it provides investors the ability to measure
financial performance excluding items beyond our control, such as
fuel costs, which are subject to many economic and political
factors, or not related to the generation of an available seat
mile, such as operating expense related to certain non-airline
businesses. We believe this non-GAAP measure is more indicative of
our ability to manage airline costs and is more comparable to
measures reported by other major airlines.
NON-GAAP FINANCIAL MEASURE RECONCILIATION OF
OPERATING EXPENSE PER ASM, EXCLUDING FUEL ($ in millions,
per ASM data in cents) (unaudited) Three
Months Ended Twelve Months Ended December 31,
December 31,
2019
2018
2019
2018
$
per ASM
$
per ASM
$
per ASM
$
per ASM
Total operating expenses(1)
$ 1,804
$ 11.22
$ 1,752
$ 11.55
$ 7,294
$ 11.43
$ 7,392
$ 12.34
Less: Aircraft fuel and related taxes
455
2.83
476
3.14
1,847
2.89
1,899
3.17
Other non-airline expenses(1)
12
0.08
12
0.07
46
0.08
44
0.07
Special items
1
-
4
0.03
14
0.02
435
0.73
Operating expenses, excluding fuel(1)
$ 1,336
$ 8.31
$ 1,260
$ 8.31
$ 5,387
$ 8.44
$ 5,014
$ 8.37
(1) Recast to reflect the adoption of ASC 842 Leases.
Operating Expense, Income before Taxes, Net Income and
Earnings per Share, excluding special items, gain on equity method
investments, and impact of tax reform
Our GAAP results in the applicable periods were impacted by the
following: (a) the 2017 tax reform, (b) a gain on equity method
investments, and (c) charges that are deemed special items. We
believe the impacts of these items make our results difficult to
compare to prior periods as well as future periods and guidance.
During the periods presented below, special items include one-time
costs related to the Embraer E190 fleet transition as well as
one-time costs related to the implementation of our pilots'
collective bargaining agreement. We believe the impacts of these
items distort our overall trends and that our metrics and results
are enhanced with the presentation of our results excluding the
impact of these items. The table below provides a reconciliation of
our GAAP reported amounts to the non-GAAP amounts excluding the
impacts of these items.
NON-GAAP FINANCIAL MEASURE RECONCILIATION OF OPERATING
EXPENSE, INCOME BEFORE TAXES, NET INCOME AND EARNINGS PER SHARE
EXCLUDING SPECIAL ITEMS, GAIN ON EQUITY METHOD INVESTMENTS,
AND IMPACT OF TAX REFORM
(in millions, except per share
amounts)
(unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2019
2018(1)
2019
2018(1)
Total operating expenses
$
1,804
$
1,752
$
7,294
$
7,392
Less: Special items
1
4
14
435
Total operating expenses excluding special items
$
1,803
$
1,748
$
7,280
$
6,957
Operating income
$
227
$
216
$
800
$
266
Add back: Special items
1
4
14
435
Operating income excluding special items
$
228
$
220
$
814
$
701
Income before income taxes
$
220
$
201
$
768
$
219
Add back: Special items
1
4
14
435
Less: Gain on equity method investments
-
-
15
-
Income before income taxes excluding special items and gain on
equity method investments
$
221
$
205
$
767
$
654
Income before income taxes excluding
special items and gain on equity method investments
$
221
$
205
$
767
$
654
Less: Income tax expense
59
31
199
30
Less: Income tax benefit related to special items
-
1
4
108
Less: Income tax (expense) related to gain on equity method
investments
-
-
(4
)
-
Less: Income tax benefit related to tax reform
-
17
-
28
Net Income excluding special items, gain on equity method
investments, and tax reform impact
$
162
$
156
$
568
$
488
Earnings Per Common Share:
Basic
$
0.56
$
0.55
$
1.92
$
0.60
Add back: Special items, net of tax
0.01
0.01
0.04
1.05
Less: Gain on equity method investments, net of tax
-
-
0.04
-
Less: Tax reform impact
-
0.06
-
0.09
Basic excluding special items, gain on equity method
investments, and tax reform impact
$
0.57
$
0.50
$
1.92
$
1.56
Diluted
$
0.56
$
0.55
$
1.91
$
0.60
Add back: Special items, net of tax
-
0.01
0.03
1.04
Less: Gain on equity method investments, net of tax
-
-
0.04
-
Less: Tax reform impact
-
0.06
-
0.09
Diluted excluding special items, gain on equity method
investments, and tax reform impact
$
0.56
$
0.50
$
1.90
$
1.55
(1) Prior period results
have been recast to reflect the adoption of ASC 842 Leases.
Return on Invested Capital
Return on invested capital, or ROIC, is an important financial
metric which we believe provides meaningful information as to how
well we generate returns relative to the capital invested in our
business. We believe this non-GAAP measure provides a meaningful
comparison of our results to the airline industry and our prior
year results.
NON-GAAP FINANCIAL MEASURE RECONCILIATION OF RETURN ON
INVESTED CAPITAL (in millions) (unaudited) Twelve
Months Ended December 31,
2019
2018(3)
Operating income
$ 800
$ 266
Add: Interest income
19
11
Add: Interest component of aircraft lease commitments (1)
17
22
Add: Special items (2)
14
435
Subtotal
850
734
Less: Income tax expense impact
219
186
Operating Income After Tax, Adjusted
631
548
Average stockholders' equity
$ 4,710
$ 4,660
Average total debt
1,735
1,389
Average aircraft lease commitments
229
287
Invested Capital
6,674
6,336
Return on Invested Capital
9.5%
8.6%
(1) Interest component of aircraft lease commitments Average
aircraft lease commitments
229
287
Interest component of aircraft lease commitments (Imputed interest
at 7.5%)
17
22
(2) Special items include one-time costs related to the
Embraer E190 fleet transition as well as one-time costsrelated to
the implementation of our pilots' collective bargaining agreement.
(3) Prior period results have been recast to reflect
the adoption of ASC 842 Leases.
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